State of Business-Intelligence Technology Adoption
HR leaders are attempting to surmount barriers to collecting and utilizing workforce analytics, according to a recent research, which emphasizes the importance of devising a solid business-intelligence-adoption strategy.
By Lexy Martin and Lia Smith
The discussion of how metrics and analytics are used and conducted today between HR community members could be compared to describing the various parts of an elephant. And, just like an elephant has many complex parts, there are many ways (and parts) to reporting and using metrics as well as to implement and conduct workforce analytics.
This article addresses the different components and approaches to achieving business intelligence and the barriers HR leaders may face when getting started or trying to expand on a BI platform. It also emphasizes the importance of having a solid strategy so that a highly successful BI solution can be achieved.
To fully institutionalize workforce analytics, a set of technologies is required. But technology is only the first part of successfully introducing business intelligence; we will discuss the other portion later.
Let's first begin with detailing the set of components that are used to describe business intelligence as viewed by CedarCrestone: a system of record, data repository or data warehouse, reporting tools, presentation/visualization approach, analytical tools, and distribution and alert technologies.
Below we discuss the components and include the level of market adoption found in research conducted for the CedarCrestone Metrics and Analytics 2008 HR Systems Mid-year Survey Update White Paper reportpublished in May 2008 and the latest CedarCrestone 2008-2009 HR Systems Survey, published October 2008.
According to CedarCrestone's 2008-2009 HR Systems Survey white paper, which will be presented at the HR Technology Conference® in October, Oracle/PeopleSoft provide the preferred HR management systems (40 percent overall) among survey respondents.
PeopleSoft is more strongly in use among larger organizations, those with more than 10,000 employees (54 percent).
But not all information about the workforce necessarily resides in the HRMS. In many organizations, talent information resides in various other talent-management applications and suites -- and because key workforce metrics may also reside in these other repositories, there can be data integrity and alignment issues when the solutions are from different vendors.
Our research shows 50 percent of respondents take a best-of-breed or a mixed talent-management approach whereby each of their talent-management applications come from a variety of vendors. These may be the HRMS vendor, one or more best-of-breed application vendors, and one or more industry-specific application vendors. Twenty-four percent of respondents, however, take an integrated talent-management approach, whereby talent-management applications come from the same vendor's solution that is the HRMS system of record. The business-intelligence data from talent management applications includes recruiting, performance management, learning management and more.
Because business intelligence requires data from HR and other sources, a data repository or data warehouse is required. Other sources of data include payroll for salary and absence information; financial systems for financial performance; and customer-facing application data that provide information such as customer satisfaction. When coupled with talent-management data, decision-makers can see the impact of talent on financial performance and customer satisfaction at a minimum.
Some organizations also pull in data from benchmarking organizations to analyze turnover, performance or salaries against industry norms. One-third of survey respondents are using an HRMS warehouse (40 percent) and most frequently it is either from Oracle/PeopleSoft or SAP.
Sixty-five percent of survey respondents said they use the reporting tools of their underlying HRMS to prepare simple management reports. Reporting tools also are used to create operational and ad-hoc reports. Thirty-four percent of survey respondents generate ad-hoc reports from the HRMS. Nineteen percent of respondents have a multidimensional reporting capability that allows them to drill down into the data to see what is behind a specific metric.
A presentation/visualization approach allows managers to view metrics on reports via intranet or a corporate portal in an actionable format such as a dashboard or scorecard. These approaches are most useful when they allow the manager to easily and intuitively view key metrics and then drill down to examine underlying numbers to see what action should be taken.
A scorecard or dashboard is still the domain of early adopters with 21 percent having one today and another 21 percent planning for this within the next three years. We see, however, some organizations moving away from adopting formal scorecards towards implementing dashboards, particularly since technology solutions are now available.
The options for analytical tools are vast, including those from Excel to predictive analytics. Thirteen percent of respondents have a stand-alone workforce analytics capability today, with 23 percent more planning for this within the next three years.
Statistical packages from various vendors have been adapted to workforce analytics. There is analytics functionality in just about every talent-management application or suite. We see options for stand-alone workforce analytics from the ERP vendors as well as niche vendors such as DoubleStar or Infohrm. These latter two organizations have different approaches, but both provide a Software-as-a-Service (SaaS) delivery option. These solutions are a good way to get started in showing management the power of analytical tools.
Predictive analytics is a modeling approach for "what if" analysis. What if we could improve the number of high performers? What would the impact be on potential revenue? Only 6 percent of survey respondents have predictive analytics today. Seventeen percent more will have this capability within the next 36 months.
A final analytical tool is workforce planning. Fifteen percent have this in use today, with 30 percent more planning for this within three years.
The next business intelligence component is distribution and alert technologies. The ideal approach to distribute metrics is to "push" information through roles-based workflow notifications or alerts when action needs to be taken. Only 7 percent of survey respondents have such "push" technology today, with 21 percent planning for this in the next three years.
This chartsummarizes the adoption of these components. See CedarCrestone 2008-2009 HR Systems Survey for further adoption numbers.
Bringing Business Intelligence Together through Middleware
To truly institutionalize business intelligence an organization will also need some kind of middleware.
Middleware has become a term heard throughout the technology ecosystem leaving some people to wonder exactly what it is. To put it simply, middleware orchestrates getting data from one or more sources into some form of presentation format. That output may be a report, a dashboard, or an alert showing key metrics. An example of middleware is Oracle's OBIEE(Oracle Business Intelligence Enterprise Edition).
OBIEE is a business-model and data-handling solution that maps between sources of data and the presentation layer.
The sources of data might be the HRMS and other applications such as talent-management solutions. Sources may also include a data warehouse or data marts, or even everyday tools such as Excel.
The presentation layer may include reports, dashboards and alerts. OBIEE also provides for ad-hoc analysis whereby a manager can drill down into data on a dashboard and see the underlying detail. A middle layer such as OBIEE is critical in that it provides a simplified business model that contains the complex data dimensions and metric calculations needed for any presentation approach and hides all the complexity from business users.
The Importance of a Good Strategy
Earlier we mentioned that technology is only one part of introducing business intelligence. Of more importance is the strategy used to lead the HR function, and in fact the entire organization, toward adopting metrics-based management. What are the business needs for workforce metrics and analytics? What are the pains that must be addressed?
When considering the technology aspect of your BI strategy, start with the end in mind. Develop a technology blueprint that addresses requirements for everything identified above, including: reporting, analytics, a presentation approach and distribution.
While you may start with a single component such as a SaaS analytics approach or a point application that addresses a specific workforce issue such as retention, skill gaps or compensation inequities, your ultimate solution should eventually evolve into a more integrated solution that embraces all the components detailed above.
Lexy Martin is director of research and analytics and Lia Smith is a marketing communications specialist for CedarCrestone.The annual CedarCrestone HR Systems Survey is the longest running survey on the state of workforce technologies adoption. For 11 years, it has provided detail on technology adoption and an overview of the level of process, technology and people outsourcing. Its primary purpose is to help organizations in application prioritization and in cost justifying their choices. For the past two years, CedarCrestone has published a mid-year report focusing on metrics and analytics. Both are based on an annual survey of organizations with at least 500 employees. The primary respondent is an individual at the intersection of HR and information technology.